Moody's: Negative view for Asia Pacific R&M

Moody's Investors Service said it maintains a negative outlook for the refining and marketing industry in Asia Pacific over the next 12 to 18 months. The negative view matches the outlook for the sector elsewhere in the world.

The R&M sector continues to be plagued by surplus capacity, aggravated by a slow recovery in refined product demand, and high inventories, Moody's said.

The agency said it expects regional refining margins in Asia to remain pressured over the next 12 months due to the industry's capacity overhang. It will take a long time to restore the supply-demand equilibrium that was disrupted by the sizeable capacity expansion fueled by the record high refining margins seen in the last up-cycle, the agency said, and the severe global demand shrinkage in this current down-cycle.

Growth in China and India will be the key to the sector's fortunes over the next 12 to 18 months, Moody's added.

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